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11/23/2013

How to make money in these days: Sell short a company's stock then hire lobbyists to get the government

Sell short a company's stock then have "one chance at salvation: governmental interference." When businesses spend some much time and resources trying to use government to make money, there are other more productive efforts that they aren't doing. From the Washington Post:

The wager was a $1 billion short against Herbalife, a multilevel marketing operation that recruits distributors to sell weight-loss products. Last December, Ackman made the case to an investor conference that the company was actually a massive pyramid scheme, preying on "distributors" who pay to sign up before realizing that the product is too expensive to sell. Eventually, he implied, it would collapse under its own weight.

The stock dropped about 38 percent in a week, but that wasn't enough for Ackman, who'd set a price target of zero. And then, something terrifying happened: The stock started rising again. Activist investor Carl Icahn took the other side of the bet by becoming the company's single biggest shareholder in January. . . .

"There's reasons we're still short the stock. If we didn't think [regulatory authorities]would take action, we would've given up a long time ago," Ackman said in an interview in D.C, on Tuesday. "We've got an unbelievable amount of resources on this." . . . .